You stumble upon a magical lamp. You rub it and a djinni appears. However, instead of granting you a wish, the bastard offers you a deal.
Should you accept, your country's government will tomorrow pass a Bitcoin Law similar to El Salvador's, meaning Bitcoin will function as legal tender alongside your current currency.
- You can pay your income tax with Bitcoin.
- Bitcoin is exempt from capital gains taxes.
- Merchants are obligated to accept Bitcoin as payment (with conversion opt-in like in El Salvador).
- You get to keep your coins in self-custody (but keep reading).
Along with that, you must accept a full KYC, AML, surveillance package.
- To use Bitcoin legally, you must surrender your addresses/utxo ids/xpubs to a centralized government database and declare where you got it from. You receive a government-signed certificate with your "Financial ID" which you can keep as an app on your phone.
- When accepting on-chain payments, merchants are obligated to verify the sender address against said database and your "Finacial ID" certificate.
- You can't legally use mixed coins unless you "come clean" by declaring them, but you may be investigated and required to deanonymize the full chain that can be traced back to a purchase you made, say on a CEX.
- For Lightning, merchants are obligated to store your "Financial ID" along with every paid invoice (preferably, it is embedded in the invoice data), so the point of sale must first scan your phone for the ID before issuing an invoice for payment.
Question: Would you accept this deal?
Nuances to consider:
- If you think the trade-off is draconian, you should be made aware that this is pretty much a reality already in cashless societies (which includes, for example, most of Europe). It's just that the KYC info resides currently with banks and card providers and there is no centralized mass surveillance (as far as we know) other than mandatory reporting of transactions over X. But authorities can request this information at any point and piece together your entire digital financial history when needed.
- What I described is what's legally required, but this does not preclude the existence of an inevitable grey zone/black market. Just like in the fiat world, many businesses use cash (or even some digital rails) to keep things off the books and dodge taxes. It's possible, just illegal, punishable and hard to enforce.
- The "Financial ID" is not a revolutionary concept either. Many countries (again, hello European Megastate) already issue their citizens digital state IDs that we keep on our phones along with vaccination certificates and other state documents.
Bonus question: In such a world, would you conform to the law or try to stay in the grey zone where possible?
Accept, mostly compliant3.0%
Accept, grey zone, if possible15.2%
Reject81.8%
33 votes \ poll ended